The metrics of relationships: Measuring satisfaction, loyalty and profitability of relational customers

In the last two decades, it has been suggested that the marketing discipline is undergoing a paradigm shift from a transactional perspective to a relational perspective (Sheth & Parvatiyar, 2002). At the same time, there has been a call for the discipline to focus on accurate measurement of the outcome of marketing activities (Rust, Ambler, Carpenter, Kumar, & Srivastava, 2004). Extant research in this area has predominantly examined the sales and profitability of relationships through customer life time analysis or examined attitudinal measures such as satisfaction and loyalty. This paper attempts to combine both streams of research by examining the profitability, satisfaction and probability of switching associated with transactional customers, relationship customers (less than five years of relationship) and deep relationship customers (more than five years of relationship) in three business to business industries. The results demonstrate the transactional customers are most profitable followed by relationship and deep relationship customers. The probability of switching was in the reverse direction of profitability and there were no difference in satisfaction measures. Implications for research and practice and also derived in the paper.